Won continues slide despite govt efforst
Won continues slide despite govt efforst
SINGAPORE (Reuters): Asian currencies were shrouded in gloom yesterday as the South Korean won sank to new lows despite government efforts to calm shaky markets.
The won hit its daily lower limit of 1,565.9 to the dollar within the first half hour of trade, down almost seven percent from Tuesday's 1,460 close. Trading was suspended for the rest of the day.
A Finance Ministry suspension of business at five merchant banks and worries about Seoul's ability to redeem short-term foreign debt obligations precipitated the won's descent.
Dealers scoffed at Finance Minister Lim Chang-yuel's package of measures to stabilize the markets and draw in foreign funds, focusing instead on the suspension of the banks after last week's closure of nine merchant banks.
"The measure is just a peanut. Foreign investors are not fools," said a foreign bank dealer in Seoul.
The central Bank of Korea sold dollars in value-today and value-tomorrow transactions in a desperate bid to prevent corporate defaults.
The Taiwan dollar fell through the T$32 support level to the U.S. dollar, ending at T$32.229 from Tuesday's T$31.963 close.
Taipei dealers attributed the drop partly to active non- delivery forward buying of U.S. dollars by foreign fund managers following the Taiwan dollar's recent failure to extend its gains significantly.
But exporter U.S. dollar sales and fund inflows to the stock market were expected to contain the Taiwan dollar's decline.
The Hong Kong dollar hit a six-week low of 7.7450/60 to the U.S. dollar and forwards rose sharply in the face of short- selling by overseas players.
"We're hearing there are a lot of European funds trying to get out of the stock markets in Korea and Hong Kong," a said U.S. bank dealer in Singapore.
In Southeast Asia, the Indonesian rupiah remained in the hotseat as players swooped on any mention of President Soeharto's health in thin, easily-spooked year-end markets.
The Malaysian ringgit fluctuated in a wide range but remained largely depressed by the plight of the won and rupiah.
Talk of large dollar offers from agents of Bank Negara Malaysia above the 3.6850/6900 levels cushioned the ringgit's falls, but dealers said there was dollar buying interest around 3.6400.
The Singapore dollar looked soft in the face of strong local and offshore bids for the U.S. dollar below the 1.62 level.
"Technically, the market is looking at 1.63. The Singapore dollar still has a long way to go compared with the others, especially the ringgit," said Ishak Ismail, market intelligence analyst at I.D.E.A.
The Thai baht hovered around 42.10/25 to the dollar in thin offshore markets for most of the day. The onshore market was closed for the Constitution Day holiday.
Dealers shrugged off comments by Deputy Prime Minister Supachai Panitchpakdi that Thailand may consider lowering interest rates after the first quarter of 1998.
The Philippine peso finished soft at 35.24 to the dollar against a previous 35.105 after the central bank cut its overnight borrowing rate to 11 percent from 12 percent.